Frequently Asked Questions

Business

• Forensic Accounting involves the analysis of finance related facts gathered through auditing and investigative methods and procedures to resolve legal problems. Forensic accounting is much different from traditional auditing. Forensic accounting is a specialty requiring the integration of investigative, accounting, and auditing skills. The forensic accountant looks at documents, financial and other data in a critical manner in order to draw conclusions and calculate values and to identify irregular patterns and/or suspicious transactions. A forensic accountant does not merely look at the numbers but rather looks behind the numbers.

The Advantages of remaining as a sole trader

• No requirement to have an audit
• No annual returns to the CRO
• All “profits” accrue to you personally
• Certain expenses are allowable in calculating your “taxable profits”

The Advantages of being a limited company

• A corporate veil exists between the company & you personally
• Easier to dispose of a legal entity
• Corporate identity is easier to maintain
• Certain expenses are allowable in calculating your “taxable profits”

• 6 years

• Once a company reaches €7.5m turnover it is obliged to have an annual audit. Up to that point the company merely has to file an annual return B1 & unaudited accounts

• A director of a company could be found guilty of reckless trading if the company fails to meet its debts as they fall due

• B1 is an annual return which must be completed by the company. It shows details of directors & shareholdings. It is then signed by a director & the company secretary & filed in the CRO. The return usually refers to an accounting period ended not more than 9 months before the ARD.
  
  The Annual Return Date is determined by the date of incorporation & the date on which the first Annual Return was submitted

• This dependent on the size ( turnover, employees & number of transactions) & complexity of the organisation.  Most SMEs produce monthly accounts in order to have the most up to date information on which to base their decisions. If one only has quarterly or annual accounts, by the time they are produced several months have passed & strategic opportunities may have been missed or corrective actions unnecessarily delayed

• Bank overdraft
• Term loan
• Leasing
• Invoice discounting / Factoring
• Fee finance e.g. professional fees or insurance premiums
• Asset based Lending – borrow against stock, plant or property
• Supplier Payment Finance (a mechanism to pay suppliers, secured on the company’s assets)
• Confirmed Order Finance (on the basis of confirmed sales to “blue chip” debtors)

Income Tax

• This return now encompasses the MED1 form, allows you to claim tax credits & credits for local authority service charges e.g. refuse collection.

• This return is to be completed by all company directors and should include details of all sources of income & gain during the year. The form is to returned with any outstanding tax by 31 October each year for the preceeding calendar year. 

• Preliminary tax is an assessment of your tax liability in any tax year & should be paid by 31st October if paid manually, or by the 16th November if paid via ROS, the Revenue On-Line System.

VAT

• If you believe that your or your  companies trade will exceed €37,500 for services or €75,000 for goods in the next 12 months you need to register for VAT

• Once you estimate that your trade will exceed €1,000,000 in the next 12 months you must move from a “cash receipts” basis to an “invoice basis”. You must advise the Revenue when you are changing from one system to the other.

• This is dependent of the size of entity involved. Bi-Monthly, Quarterly or annual.

• Normally it is payable when the return is due, unless you pay by a Direct Debit, in which case you can pay the balance at year end, but note that the DDs paid during the year must equate to at least 95% of the full year liability

Sundry issues

• Employees who are in possession of a company car are liable to tax based on 30% of the original market value of the vehicle when first registered. There is a sliding scale which reduces this % based on actual business mileage
  
  Employees who are in possession of a company van are liable to tax based on 10% of the original market value of the vehicle when first registered. This can be reduced in certain circumstances.

• Only expenses incurred as wholly & necessary for the execution of your employment are allowable to be paid to employees. A full record of these expenses are to be kept.

• In normal circumstances an employee is entitled to claim 2 weeks pay for each full year of service + 1 bonus week once they have completed two full years service. There is a ceiling of €600 per week in calculating “pay”. The employer is entitled to reclaim 60% of the statutory amount from the Insolvency Fund. A Form RP50 needs to be completed by the employer & employee.
  
  Currently the Inspector of Taxes will accept an offset of this refund against outstanding tax liabilities

A employee is entitled to the following notice from the employer based on full years service:


• 0 years to 2 years weeks
• 2 years to 5 years 2 weeks
• 5 years to 10 years 4 weeks
• 10 years to 15 years 6 weeks
• Over 15 years 8 weeks

The above may be superseded by way of employment contract The employee is obliged to give the employer notice as per his contract of employment.

• On certain contracts awarded by Government bodies e.g. Fas, when settlement is made for an invoice, the paying body may withhold 20% of monies due until the Corporation Tax return (CT1) for the previous year has been filed. The monies withheld can be offset against the Corporation Tax liability and only the will the balance normally be refunded to you, The impact of this needs to be noted on your cash-flows.

• Unless as the principle contractor you hold a valid C2 Certificate for a subcontractor, you are to withhold 35% of any monies paid, VAT inclusive, to any subcontractor. You are to issue a RCT Cert to the contractor which notes the deduction. You are then on a monthly basis to Return & pay over this deduction to the Revenue Commissioners. The Principle Contractor must also complete an annual return of monies withheld. The subcontractor can reclaim this from the Revenue, however in practice most subcontractors offset this refund against their outstanding VAT & PAYE/PRSI liabilities.

Dublin Office CMPW Ltd, T/a Guardian Management Accounting. Unit 3 Grange Road Retail Park Grange Road, Rathfarnham, Dublin 16 T: 01 4240519 | F: 01 4240521 E: info@guardianma.ie

Wicklow Office (Contact Colum Whelan) 2 High Street, Wicklow, Co.Wicklow. T: 040 471866